The goal of this project is to analyze the effects of family and schooling on the development of health and the formation of other capabilities that promote health within and across generations. Our developmental approach focuses on factors that promote health, beginning in the early years, rather than on cures for diseases and their costs, the current focus of much health policy. To achieve this goal, we propose to develop and apply economic models to analyze numerous large- scale data sets with life-cycle information to investigate the sources of health disparities, and the mechanisms that social policy can influence: schooling and the family environments of children. We will investigate the causal foundations of the contemporaneous empirical association between health and socioeconomic status, including education, and the association between health at all stages of the life cycle and life-cycle environments and investments. We will build on our previous work to study how capabilities - cognition, personality traits, and health - determine a variety of outcomes. We will build on and extend our prior research on the technology of capability formation, analyzing parental investments in multi-sibling families and parental choices in alternative market settings. We will study the capabilities that determine health conditions and other outcomes, and the factors that determine the life-cycle and intergenerational evolution of these capabilities. This research will deepen our understanding of the sources of the education-health correlation and of other relationships between health and socioeconomic status, and the mechanisms that produce these relationships. It will suggest policies that foster the capabilities that promote education and health. We will use both experimental and nonexperimental data to develop dynamic models for the production of health and other capabilities. We will develop the econometric tools needed to identify the effects of capabilities on diverse outcomes and the effects of parental investment and schools on the formation of capabilities over the life cycle. We will develop techniques to pool data with comparable measurement frameworks from different segments of the life cycle to analyze life-cycle outcomes in the absence of life-cycle information from any single data set. To supplement our analysis of the dynamics of capability formation, and its implications for health, we will conduct parallel analyses on the life-cycle development of health for multiple generations of rhesus monkeys. Rhesus monkeys resemble humans in many important aspects. They share 95% of our genes and they have complex social structures. Working with Stephen Suomi at NICHD, we have access to rich, experimentally manipulated data on health, genes, environments, and personality traits over multiple generations, that we will analyze with our dynamic models of capability expression and capability formation.